2014 (7) TMI 920 - HC - Customs

Recovery of demand when stay application is pending before tribunal - classification dispute - import of steaming non-coking coal - classifiable as Steaming Coal or bituminous coal - Held that - when stay application is pending before the CESTAT, the second respondent should not resort to any coercive action for collection of any amount, till the stay application is disposed of by the CESTAT. Therefore, the writ petitions are disposed of directing the the second respondent not to take any coercive steps for recovering any amount from the petitioners, till the disposal of the stay application by the CESTAT. - Decided in favor of assessee.

Summary

Issues:
1. Classification of imported coal as 'bituminous coal' instead of 'steaming non-coking coal'
2. Demand of differential customs duty and penalty by the second respondent
3. Appeal before Customs, Excise and Service Tax Appellate Tribunal (CESTAT) and stay application for waiver of pre-deposit
4. Coercive action by second respondent for recovery of disputed duty and penalty pending stay application

Classification of imported coal: The petitioners, manufacturers of paper and paper boards, imported "steaming non-coking coal" for manufacturing purposes. The imported coal was provisionally assessed under Section 18 of the Customs Act, 1962, and allowed to be cleared as 'Steaming Coal' under a concessional rate of duty. However, the second respondent issued a show cause notice classifying the imported coal as 'bituminous coal' and demanding a differential customs duty of a significant amount. The petitioners contested this classification, stating that the imported goods were clearly described as 'steaming non-coking coal' in the invoice and agreement with the supplier.

Demand of differential customs duty and penalty: Despite the petitioners' objections and submissions, the second respondent issued an Order-in-Original classifying the imported coal as 'bituminous coal' and denying the benefit of a specific customs notification. Additionally, the second respondent ordered the confiscation of the imported coal and imposed a penalty of Rs. 1,00,000. This decision led the petitioners to file an appeal before CESTAT, seeking relief from the demand and penalty.

CESTAT appeal and stay application: The petitioners, in their appeal before CESTAT, also filed a stay application requesting a waiver of pre-deposit under Section 129 E of the Customs Act, 1962, and sought a stay on the operation of the Order-in-Original. However, pending the decision on the stay application, the second respondent initiated coercive action to recover the disputed duty and penalty, prompting the petitioners to approach the High Court through writ petitions seeking relief.

Coercive action pending stay application: The High Court, considering the pending stay application before CESTAT and the coercive actions taken by the second respondent for recovery, held that no coercive steps should be taken for collecting any amount from the petitioners until the disposal of the stay application by CESTAT. Consequently, the writ petitions were disposed of with a direction to the second respondent to refrain from coercive recovery actions. No costs were awarded, and the connected miscellaneous petitions were closed as a result of the judgment.